Ushs132bn in soft loans on offer by the French for green energy

The French Agency for Development (AFD), a development banking institution with roots in East Africa through its SUNREF programme is offering up to 35 million Euros (Approximately Ushs132bn) to Ugandan projects that seek to set up renewable energy generation projects.

Officials from AFD told journalists this week that the money is being channelled through commercial banks in Kenya with support from Uganda Manufacturers Association and the Kenya Association of Manufacturers (KAM).

Some of the potential candidate projects that could benefit from the funds include solar, biomass and biogas, mini-hydro power plants as well as energy efficiency projects.

Uganda Manufacturers Association (UMA) and the Kenya Association of Manufacturers signed a Memorandum of Understanding early this year in which both organizations offered to cooperate and help facilitate interested projects to access the funds, as well as offer technical knowledge on sourcing the equipment.

UMA Executive Director Ssebaggala Kigozi told The Sunrise that borrowers can access the concessional loans at between 11 to 12 percent interest rates for loan projects that can last as long as 5 years. Ssebaggala further pointed out that the loan facility is available for a period of 10 years.

A joint statement signed between the two associations, noted that: “This innovative range of services consequently gives the private sector greater access to bank financing to purchase better quality equipment, and thereby make savings and increase its competitiveness. This is expected to result into better energy management and adhering to better environmental standards.”

The offer could prove a welcome and timely intervention by the French for Uganda which continues to suffer from inadequate electricity supply. The latest 2014 census report showed that only 20 percent of Ugandans still have no access to electricity. Besides the very high cost of power, poor access is blamed for the devastating effects of deforestation across the country.

It is not clear why the SUNREF programme chose to use Kenyan and not Ugandan banks. But many experts on development finance say that local banks have a poor reputation when it comes to handling such huge funds for long-term development purposes.

A few years ago, the European Development Bank provided funds for concessional lending to agricultural and education projects but critics say local commercial banks simply sat on the funds and used them for trade and other financing projects.

Victoria Ssekitooleko, a former minister of agriculture told The Sunrise last year that when one goes to commercial banks trying to access concessional loans from government and donor agencies, banks tend to hide information of those products.

Meanwhile, AFD officials revealed that the funding agency last year raised its funding basket for Uganda to 73 million Euros with the view supporting sustainable development projects in the fields of water and sanitation, energy, environment and climate change as well as the private sector.

With financial support to the National Water and Sewerage Cooperation (NWSC) AFD officials laid a claim to being one of Uganda’s foremost partners on the path to achieving the Sustainable Development Goals.